American Axle looks to shake loose "job bank"

American Axle Manufacturing (AAM), one of General Motors' main suppliers, isn't bankrupt,but it is feeling financial pain from the 1,100 workers that it is currently paying not to work. A grand total of $75 million is spent by AAM each year to maintain its share of the United Auto Workers "jobs bank", which represents approximately 2 percent of the supplier's gross sales and a substantial dent in the company's $56M of profit last year.

In order to cut the banked workers free from AAM's balance sheet, the company is mulling the same approach taken by others in the unionized auto world - massive buyouts. Assuming that workers would bite on a hypothetical figure of $100K/each (a number that has been thrown around in the context of similar action from Delphi and GM), the company would obtain a return on its investment in approximately 18 months. The company is intent on returning to its previous financial performance by 2008, which is a move that would require adding $100M to the bottom line each year.

[Source: Detroit News]

Share This Photo X